Welcome to Mortgage Guide
Mortgage Application Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Second Mortgage
from:Many homeowners consider adopting a second mortgage on their property. This type of loan is secured with the same collateral as the initial home mortgage advance. This second loan is subordinate to the original.
It may seem unlikely that a lender would provide funds for a home that already has a loan against it. However, in real estate a single property can have multiple liens and loans. The first mortgage is registered as a first position trust deed.
The second mortgage is registered as a subordinate lien against the same property. In very rare cases, a singe property can have a third or a forth mortgage. The third and forth loans are quite unusual and most lenders shy away from such agreements.
If the loan goes into default, the initial loan is paid off first. The next loan is paid off later in such an instance. This makes the subordinate loan quite risky for the lender and it also makes getting one of these loans a little more difficult.
The consumer can expect to pay a higher interest rate on an additional loan. This ensures that the lender is compensated for the risk that it takes in the process. The homeowner can pay off the loan by making slightly higher payments than required in some instances.
Home Equity Loans
Some homeowners may be surprised to discover that a second mortgage can take the form of a home equity loan. In essence, the two are pretty much the same, at least from a financial point of view. The major difference seems to be a matter of syntax.
A home equity loan refers to the debt and a mortgage focuses more on the legality of the agreement. Some homeowners feel a little more comfortable taking out a home equity line of credit or loan rather than a second mortgage because they seem less intimidating. However, they are essential the same thing when you take a purely financial perspective.
Term Length
The term length of a second mortgage depends greatly on the lending institution and the borrower. Some agreements are arranged to take twenty years to pay off in full. Others may be paid off in a year or two.
Lender Requirements
Lenders do not want homeowners to default on their loans. In most cases they take great care to assure that applicants are able to pay the debt comfortably and within the specified timeframe. There are some things that lenders look for before granting a second mortgage.
There should be enough equity in the first mortgage and the homeowner should show a capability to pay. The capability to pay is typically measured with a debt-to-income ratio balanced with a healthy credit score. The applicant’s work history will be a factor as well.
Homeowners should look into refinancing their first loan before applying for a second loan. In many instances a simple refinance loan can take care of the homeowners’ needs. It is also much more difficult to get approved for refinancing if you already have a second mortgage.
Mortgage Application Specific links
Watch Free Videos At Mevio!
- Tons of Free Videos, Only At Mevio.com
-- http://www.mevio.com/
Modern Day Jesus: Santa vs. Jesus
- Jesus Christ! Modern day life is pretty tough for ol' J.C. - especially when he has to compete with that conceited Kris Kringle! Watch it on Atom.com
-- http://www.atom.com/
Mortgage Application News
San Francisco considers plan to charge drivers - Seattle Times
A sign alerts drivers to a congestion-charge zone in London. San Francisco is studying similar methods to ease traffic. SAN FRANCISCO — Following the lead of cities such as London and Singapore, officials in San Francisco are considering a plan to ...
Read more...Mortgage application volumes held steady last week - Marketwatch
CHICAGO (MarketWatch) -- The volume of residential mortgage applications filed last week was essentially unchanged on a seasonally adjusted basis from the prior week, evan as the interest rates charged on mortgages fell further, data compiled by the ...
Read more...Mortgage Applications Hover Near 5-Year High - RTT News
(RTTNews) - Mortgage application volume hovered near a 5-year high, the Mortgage Bankers Association said Wednesday. Its market index of mortgage application volume was essentially unchanged from last week, when it surged a whopping 48 percent to ...
Read more...US mortgage applications unchanged at 5-year peak - FXStreet.com
NEW YORK, Dec 31 (Reuters) - Demand for U.S. mortgage applications was unchanged during the Christmas holiday week, holding the highest levels in more than five years with loan rates near record lows, an industry group said on Wednesday. Borrowing ...
Read more...US AVERAGE 30-YEAR MORTGAGE RATE DECLINES 1 BASIS POINT TO 5.03 PCT IN ... - Forbes
NEW YORK, Dec 31 (Reuters) - Demand for U.S. mortgage applications was unchanged during the Christmas holiday week, holding the highest levels in more than five years with loan rates near record lows, an industry group said on Wednesday. Borrowing ...
Read more...